I am back to posting after a bout of Crohn’s disease requiring the removal of my appendix. So North Dakota will join a number of other states and stop using the extra federal money added to unemployment benefits. The thought process in general is that the extra benefits deter people from finding work. Now let’s accept from the start that we can surely find people for whom this is true, and people for whom this is not true. We want some broader understanding and that is what I attempt here. In terms of data to examine I look at continuing unemployment claims, that is, people that filed an initial unemployment claim before and now file a continuing claim that they are still out of work. I aggregate claims from the weekly data into a monthly series, simply summing all the claims in a given month.
The data exhibit significant seasonality so I created a seasonally adjusted data series to smooth out and make clearer the overall situation.
The pandemic and the shutdown created an enormous spike in the claims data. However, it is pretty clear this came back down relatively quickly. In fact, the current data display a level that is fairly consistent with what we observe in pre-pandemic times. We can see this also in a seasonal data plot.
There is clearly the 2020 data well above the other years in my sample, though 2021 is not a standout situation. The overall conclusion from this is the following: continuing claims, for the most part, appear to no longer exhibit pandemic effects on the overall level. So why is that important?
It is important because we should not expect a change in policy about unemployment benefits to change a situation that does not currently exist in North Dakota. At a very real level it looks like we are back to the pre-pandemic situation in North Dakota, where we just do not have enough labor to fill available jobs, and that is not, by and large, due to “extra” unemployment benefits. Other metrics like the employment to population ratio and the labor force participation rate also show little change between pre-pandemic levels and current readings. So the good news is we are likely getting back to problems North Dakota confronted for much of the last decade. The bad news is we are still looking for solutions to that problem.